of money on boots, or clothes or milk. When, therefore, we compare
commodities which are bought by essentially different consuming
publics, their respective prices may bear no close relation to their
_real_ utility, whether marginal or otherwise. Thus the law of
diminishing utility applies to money or purchasing power, as well as
to particular commodities. The more money a man has the less is the
marginal utility which it yields him; and, where the marginal utility
of money to a man is small, so also will be the real marginal utility
he derives in each direction of his expenditure. The extreme
inequality of the distribution of wealth gives immense importance to
this consideration. Its practical implications will be discussed in
Chapter V. Meanwhile, we may express the conclusions of the present
chapter by the statement that the price of a commodity tends to equal
its marginal utility, _as measured in terms of money_, i.e. relatively
to the marginal utility of money to its purchaser.



CHAPTER IV

COST AND THE MARGIN OF PRODUCTION

§1. _An Illustration from Coal_. We have already had occasion to note
the symmetry which characterizes the relations of demand and supply to
price. This symmetry was apparent throughout the argument of Chapter
II, and it was a striking feature of the diagrams which we employed to
illustrate the argument. We shall do well to cultivate a lively sense
of this symmetry, for it will frequently save us from ignoring factors
which have a vital bearing on the problems we are considering. We
should never leave an important feature of demand without turning to